PANNA: Organic Crops Competitive with Conventional Systems

Farm profits from organic cropping systems can equal or exceed profits from conventional rotations in the Midwestern United States, according to a new study by the Henry A. Wallace Institute for Alternative Agriculture. The report,The Economics of Organic Grain and Soybean Production in the Midwestern United States, reviews past and current research on conditions that make growing organic crops profitable, as well as studies that compare organic grain and soybean production with conventional production.

There has been dramatic growth in the U.S. and worldwide in the production of and demand for organically produced food and fiber. At the same time, consumers around the world have been willing to pay premium prices for organic products. For example, farm prices for organic corn were on average 35% higher than U.S. cash prices for conventionally grown corn in 1995, 44% higher in 1996 and 73% higher in 1997. Prices for organic, cleaned Clear Hilum soybeans (the type used by the Japanese for tofu) were more than twice the U.S. cash price for conventionally grown soybeans in 1995 and 1997, and almost twice those levels in 1996. Nonetheless, the study found that premiums are not always necessary for organic systems to outperform conventional systems.

To illustrate the potential profitability of organic agriculture, Rick Welsh of the Wallace Institute analyzed a diverse set of academic studies comparing organic and conventional grain cropping systems. Among the data reviewed were six land-grant university studies that compared organic and conventional grain cropping systems; studies were conducted in Iowa, Kansas, Minnesota, Nebraska and two in South Dakota.

Following a comprehensive review of the "best science" available on the subject, Dr. Welsh determined that when organic systems were more profitable than conventional rotations, it was usually due to one or more of the following factors:

In addition to these economic benefits, the report found that organic systems in the U.S. Midwest produce benefits for the natural environment and workers' health.

The report's recommendations call for a greater U.S. public policy commitment to organic agriculture, especially in areas related to research, investment and education. Several European countries have already instituted policies that support organic farming. Denmark, for example, has enacted financial support policies, including information and marketing support and financial assistance during the transition to organic farming. Other countries with similar policies include Sweden, Germany, Norway, Finland, Austria and Switzerland. Efforts have paid off: the organic farming sector in these countries has increased dramatically since the programs were initiated.

There has been some support for organic agriculture in the United States. In Iowa, for example, a state-level program supports organic farming through the Environmental Quality Incentive Program (EQIP) that provides targeted financial incentives to farmers. Administered by the U.S. Department of Agriculture, EQIP is designed to promote adoption of particular conservation management practices. EQIP is a federal-state cost-share program in which states designate a list of conservation management practices. If EQIP funding is increased and other state legislatures list certified organic production as a conservation practice, EQIP could play a significant role in increasing the number of acres farmed organically in the U.S.

Copies ofThe Economics of Organic Grain and Soybean Production in the Midwestern United Statesare available for US$15 from the Wallace Institute. The report is also available online at the Institute's web site,http://www.hawiaa.org.